FTSE: 5,870.14 (+11.73) Mid-250: 11,825.24 (-33.52) Small Cap: 3,231.77 (-10.52): BRITAIN'S TOP shares edged higher yesterday, led by banks on bargain hunting, but the prevailing mood was cautious with some analysts and traders pessimistic about the long-term prospects for equities.
The FTSE 100 ended up 11.73 points, or 0.2 per cent, at 5,870.14, helped by some sense of relief that there was no deterioration in UK gross domestic product figures. Darkening the mood were fears over euro zone debt.
“It seems that the main game in town is the European sovereign debt situation and in particular Greece,” said Richard Hunter, head of UK equities at Hargreaves Lansdown.
The withdrawal of the US Federal Reserve’s second round of quantitative easing at the end of June alongside inflationary worries could also prove to be challenging for equity markets, he added.
British banks were among the top FTSE 100 performers, led by Barclays, up 2.3 per cent, with Royal Bank of Scotland and Lloyds Banking Group climbing 2.1 per cent and 2 per cent respectively.
UK banks had come under pressure on Tuesday after credit rating agency Moodys said it might cut its rating on 14 British financial groups, including RBS and Lloyds.
Traders also noted continued support for commodity stocks on the back of positive comment on copper and oil from Goldman Sachs on Tuesday.
Antofagasta added 1.7 per cent, with traders citing the impact of an upgrade in rating of the Chilean copper miner by Morgan Stanley to “equal-weight” from “underweight” on valuation grounds.
Commodities trader Glencore, however, slipped 0.5 per cent as the recently floated firm made its debut in the FTSE 100 index, following the start of unconditional trading in the stock on Tuesday, replacing Invensys.
Among individual movers, market heavyweight Vodafone shed 0.7 per cent after Nomura cut its rating on the mobile telecoms firm to “neutral”.
Private equity firm 3i Group was helped 1.5 per cent higher as Evolution Securities lifted its rating for the stock to “buy”, while Rexam firmed 1.5 per cent after Credit Suisse hiked its target price for the drinks can maker.
Next, International Power and Amec all fell after going ex-dividend. – (Reuters)
